Notice2025-17814
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Complex Price Improvement Mechanism
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 16, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 177 (Tuesday, September 16, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 177 (Tuesday, September 16, 2025)]
[Notices]
[Pages 44739-44743]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-17814]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103951; File No. SR-MRX-2025-19]
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Complex Price Improvement Mechanism
September 11, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 44740]]
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 4, 2025, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III below,
which Items have been prepared by the Exchange. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Complex Price Improvement
Mechanism or ``PIM'' at Options 3, Section 13. Additionally, the
Exchange proposes to make other amendments to Options 1, Section 1,
Definitions; Options 3, Section 7, Types of Orders and Order and Quote
Protocols; Options 3, Section 9, Trading Halts; Options 3, Section 10,
Priority of Quotes and Orders; Options 3, Section 14, Complex Orders;
Options 3, Section 16, Complex Order Risk Protections; Options 3,
Section 20, Nullification and Adjustment of Options Transactions
including Obvious Errors; and Options 7, Section 1, General Provisions.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/mrx/rulefilings">https://listingcenter.nasdaq.com/rulebook/mrx/rulefilings</a>,
and at the principal office of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Complex Price Improvement
Mechanism or ``PIM'' at Options 3, Section 13. Additionally, the
Exchange proposes to make other amendments to Options 1, Section 1,
Definitions; Options 3, Section 7, Types of Orders and Order and Quote
Protocols; Options 3, Section 9, Trading Halts; Options 3, Section 10,
Priority of Quotes and Orders; Options 3, Section 14, Complex Orders;
Options 3, Section 16, Complex Order Risk Protections; Options 3,
Section 20, Nullification and Adjustment of Options Transactions
including Obvious Errors; and Options 7, Section 1, General Provisions.
Options 3, Section 13
The Exchange proposes to amend Options 3, Section 13, Price
Improvement Mechanism for Crossing Transactions. Specifically, the
Exchange proposes to amend Options 3, Section 13(e)(5)(vii) to amend
the manner in which an Agency Complex Order may execute. Today, if the
Complex PIM execution price would be the same or better than a Complex
Order on the Complex Order Book on the same side of the market as the
Agency Complex Order, for options classes assigned to allocate in time
priority or pro-rata pursuant to Options 3, Section 14(d)(2), the
Agency Complex Order may be executed at a price that is equal to the
resting Complex Order's limit price. The Exchange proposes to amend
Options 3, Section 13(e)(5)(vii) to instead provide that the Agency
Complex Order may be executed at a price that is at least one minimum
price variation (as provided in Options 3, Section 14(c)(1)) better
than the resting Complex Order's limit price. With this proposed
change, the Exchange will require that the Agency Complex PIM Order
receive one minimum price variation better than the resting Complex
Order's limit price whereas today, the Agency Complex PIM Order would
be permitted to execute at a price that is equal to the resting Complex
Order's limit price.\3\ The Exchange believes that this amendment will
prevent a Complex PIM order from executing at a price where there is a
resting Complex Order on the same side of the market while still
allowing a Complex PIM order to execute and potentially receive price
improvement. This amendment is identical to Phlx Options 3, Section
13(b)(8).\4\
---------------------------------------------------------------------------
\3\ Options 3, Section 14(c)(1) provides that bids and offers
for Complex Options Strategies may be expressed in one cent ($0.01)
increments, and the options leg of Complex Options Strategies may be
executed in one cent ($0.01) increments, regardless of the minimum
increments otherwise applicable to the individual options legs of
the order. Bids and offers for Stock-Option Strategies or Stock-
Complex Strategies may be expressed in any decimal price determined
by the Exchange, and the stock leg of a Stock-Option Strategy or
Stock-Complex Strategy may be executed in any decimal price
permitted in the equity market. The options leg of a Stock-Option
Strategy or Stock-Complex Strategy may be executed in one cent
($0.01) increments, regardless of the minimum increments otherwise
applicable to the individual options legs of the order.
\4\ Phlx Options 3, Section 13(b)(8) was recently amended in SR-
Phlx-2025-35. See Securities Exchange Act Release No. 103667 (August
8, 2025), 90 FR 39042 (August 13, 2025) (SR-Phlx-2025-35) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
PIXL and Adopt New Auctions).
---------------------------------------------------------------------------
In line with the amendment to Options 3, Section 13(e)(5)(vii), the
Exchange also proposed to amend Options 3, Section 13(e)(5)(iv)(C)
which currently states, ``The exposure period will automatically
terminate . . . (C) upon the receipt of a non-marketable Complex Order
in the same complex strategy on the same side of the market as the
Agency Complex Order that would cause the execution of the Agency
Complex Order to be outside of the best bid or offer on the Complex
Order Book . . . .'' The Exchange proposes to instead provide, ``. . .
. upon the receipt of a non-marketable Complex Order in the same
complex strategy on the same side of the market as the Agency Complex
Order that would cause the execution of the Agency Complex Order to be
at or outside of the best bid or offer on the Complex Order Book.''
Specifically, the addition of ``at or'' to the early termination
provision will allow the Complex PIM Order to execute by early
terminating the auction upon the receipt of a non-marketable Complex
Order in the same complex strategy on the same side of the market as
the Complex PIM Order that would cause the execution of the Complex PIM
Order to be at or outside of the best bid or offer on the Complex Order
Book. This change aligns with the Exchange's proposal at Options 3,
Section 13(e)(5)(vii) that requires Complex PIM Orders to trade in at
least one minimum price variation as provided in Options 3, Section
14(c)(1) better than the price of a Complex Order on the Complex Order
Book on the same side of the market. Phlx has identical rule text at
Options 3, Section 13(b)(2)(D)(2).
Other Rule Amendments
The Exchange proposes to amend Options 1, Section 1(a)(12) to add
the definition of conforming ratio. The term ``conforming ratio'' is
where the ratio between the sizes of the options components of a
Complex Order is equal to or greater than one-to-three (.333) and less
than or equal to three-to-one (3.00). For example, a one-to-two (.5)
ratio, a two-to-three (.667) ratio, or a two-to-one (2.00) ratio is a
conforming ratio, whereas a one-to-four (.25) ratio or
[[Page 44741]]
a four-to-one (4.0) ratio is not; where one component of the Complex
Order is the underlying security, the ratio between any options
component and the underlying security component must be less than or
equal to eight contracts to 100 shares of the underlying security.
Further, the Exchange proposes to state that only a Complex Order with
a conforming ratio is accepted into the Exchange. This definition will
bring greater clarity to the use of the term in Options 3, Section 14.
The Exchange also proposes to re-number the remainder of Options 1,
Section 1 and update cross-citations in Options 3, Section 10(a)(1),
Options 3, Section 20(a)(1) and Options 7, Section 1(c).
The Exchange proposes to amend Options 3, Section 7(v) to lowercase
``Block Order'' which is not capitalized in Options 3, Section 11(a).
The Exchange also proposes to amend Options 3, Section 7(w) to
lowercase ``Facilitation Order'' which is not capitalized in Options 3,
Section 11(b) and to add the term ``paired'' as a descriptive term to
signify that a facilitation order is a two-sided order. The addition of
the term ``paired'' will distinguish a Block Order, which is not two-
sided, from a paired facilitation order. Finally, the Exchange proposes
to amend Options 3, Section 7(x) to lowercase ``SOM Order'' which is
not capitalized in Options 3, Section 11(d) and also include the term
``paired'' to distinguish this two-sided auction. The addition of the
term ``paired'' will distinguish a Block Order, which is not two-sided,
from a paired SOM order.
The Exchange proposes to amend Options 3, Section 9(a)(2) to note
that ``During a halt, existing auction orders and auction responses, as
well as Crossing Orders, are rejected.'' Today, the MRX System will
cancel auction orders, auction responses and Crossing Orders during a
trading halt. MRX's Rule is being added to make clear the current
System behavior. Phlx has similar rule text in Options 3, Section
9(f).\5\
---------------------------------------------------------------------------
\5\ Phlx Options 3, Section 9(f) provides, that during a halt,
the Exchange will maintain existing orders on the book (but not
existing quotes), except as noted in Options 5, Section 4, accept
orders and quotes, and process cancels. During a halt, existing
quotes are cancelled and auction orders and auction responses, as
well as Crossing Orders, are rejected. MRX's current rule text at
Options 3, Section 9(a)(2) addresses the cancellation of quotes
during a trading halt in the last sentence, but does not address the
treatment of auction orders, auction responses and Crossing Orders
during a trading halt.
---------------------------------------------------------------------------
Additionally, the Exchange proposes to amend Options 3, Section
9(d)(2) to amend the sentence which currently states, ``The Exchange
shall cancel Complex Orders that are Market Orders residing in the
System, if the Market Complex Order become marketable while the
affected underlying is in a Limit or Straddle State.'' The Exchange
proposes to instead provide, ``The Exchange shall cancel Complex Orders
that are Market Orders residing in the System, if the Market Complex
Order is about to be executed by the System while the affected
underlying is in a Limit or Straddle State.'' While orders must be
marketable to execute, the Exchange believes the proposed rule text
makes clear this behavior. The proposed rule text aligns to the last
sentence in Phlx Options 3, Section 9(d)(2) which describes trading
halt behavior on Phlx.
The Exchange proposes to remove a stray ``a'' from Options 3,
Section 14(c)(2)(i).
Finally, the Exchange proposes to amend Options 3, Section 16(a)(1)
to add the words ``relative to the other legs'' to the rule text for
additional clarification. As proposed, the sentence would state, ``The
System will reject orders for a complex strategy where all legs are to
buy if entered at a price that is less than the minimum net price,
which is calculated as the sum of the ratio on each leg relative to the
other legs of the complex strategy multiplied by the minimum increment
applicable to that leg pursuant to Options 3, Section 14(c)(1).'' The
Exchange believes the additional phrase brings greater clarity to the
current rule text. This rule text is identical to Phlx Options 3,
Section 16(a)(1).\6\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 102862 (April 15,
2025), 90 FR 16731 (April 21, 2025) (SR-Phlx-2025-17) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Amend
Phlx's Complex Order Functionality). SR-Phlx-2025-17 proposed the
same operative date as this rule change as they are both part of the
same technology migration.
---------------------------------------------------------------------------
Implementation
The Exchange proposes to implement the proposed amendment to
Options 3, Section 13(e)(5)(iv) and (vii) on or before December 20,
2026. The Exchange will issue an Options Trader Alert specifying the
date of implementation. All other amendments would be effective 30 days
after the date of the filing.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\7\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Options 3, Section 13
The Exchange's proposal to amend Options 3, Section 13(e)(5)(vii)
is consistent with the Act because with this proposed change, the
Exchange will require that the Agency Complex PIM Order receive one
minimum price variation better than the resting Complex Order's limit
price whereas today, the Agency Complex PIM Order would be permitted to
execute at a price that is equal to the resting Complex Order's limit
price. Further, this amendment will protect investors and the public
interest by preventing a Complex PIM order from executing at a price
where there is a resting Complex Order on the same side of the market
while still allowing a Complex PIM order to execute and receive price
improvement. This amendment is identical to Phlx Options 3, Section
13(b)(8).
The Exchange's amendment to Options 3, Section 13(e)(5)(iv)(C) to
provide, ``. . . . upon the receipt of a non-marketable Complex Order
in the same complex strategy on the same side of the market as the
Agency Complex Order that would cause the execution of the Agency
Complex Order to be at or outside of the best bid or offer on the
Complex Order Book.'' is consistent with the Act because it will align
Options 3, Section 13(e)(5)(iv)(C) with the Exchange's proposed change
to Options 3, Section 13(e)(5)(vii). This change aligns with the
Exchange's proposal at Options 3, Section 13(e)(5)(vii) that requires
Complex PIM Orders to trade at least one minimum price variation better
than a resting Complex Order as provided in Options 3, Section
14(c)(1). Phlx has identical rule text at Options 3, Section
13(b)(2)(C)(2).
Other Rule Amendments
The Exchange's proposal to amend Options 1, Section 1(a)(12) to add
the definition of conforming ratio is consistent with the Act as the
definition will bring greater clarity to the use of the term in Options
3, Section 14 which defines the various types of Complex Orders.
The Exchange's proposal to amend Options 3, Section 7(v) to
lowercase ``Block Order,'' and amend Options 3, Section 7(w) and (x) to
lowercase ``Facilitation Order'' and ``SOM Order'' and add the term
``paired,'' are non-substantive amendments that are
[[Page 44742]]
intended to provide consistency between these defined terms and the use
of these terms in Options 3, Section 11(a), (b) and (d).
The Exchange's proposal to amend Options 3, Section 9(a)(2) to note
that ``During a halt, existing auction orders and auction responses, as
well as Crossing Orders, are rejected'' is consistent with the Act
because during a halt the System will not execute any auction orders,
auction responses and Crossing Orders received during a trading halt as
that interest will most likely become stale. This amendment represents
the System's current operation. The proposed rule text makes clear the
treatment of auction orders, auction responses and Crossing Orders
during a trading halt. The Exchange's proposal to amend Options 3,
Section 9(d)(2) to amend the sentence which currently states, ``The
Exchange shall cancel Complex Orders that are Market Orders residing in
the System, if the Market Complex Order become marketable while the
affected underlying is in a Limit or Straddle State'' is consistent
with the Act because the proposed rule text harmonizes the text of
Options 3, Section 9(d)(2) to the last sentence in Phlx Options 3,
Section 9(d)(2) which describes trading halt behavior on Phlx. MRX's
Options 3, Section 9(d)(2) will state, ``The Exchange shall cancel
Complex Orders that are Market Orders residing in the System, if the
Market Complex Order is about to be executed by the System while the
affected underlying is in a Limit or Straddle State.''
Finally, the Exchange's proposal to amend Options 3, Section
16(a)(1) to add the words ``relative to the other legs'' is consistent
with the Act because the additional text brings greater clarity to the
current rule text. This rule text is identical to Phlx Options 3,
Section 16(a)(1).
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Options 3, Section 13
The Exchange's proposal to amend Options 3, Section 13(e)(5)(vii)
does not impose any burden on intramarket competition because any
Agency Complex PIM Order will receive one minimum price variation
better than the resting Complex Order's limit price.
The Exchange's proposal to amend Options 3, Section 13(e)(5)(vii)
does not impose any burden on intermarket competition as Phlx has an
identical rule at Options 3, Section 13(b)(8).
The Exchange's amendment to Options 3, Section 13(e)(5)(iv)(C) does
not impose any burden on intramarket competition because any non-
marketable Complex Order in the same complex strategy on the same side
of the market as the Agency Complex Order that would cause the
execution of the Agency Complex Order to be at or outside of the best
bid or offer on the Complex Order Book would early terminate the
Complex PIM Auction.
The Exchange's proposal to amend Options 3, Section 13(e)(5)(iv)(C)
does not impose any burden on intermarket competition as Phlx has an
identical rule at Options 3, Section 13(b)(2)(D).
Other Rule Amendments
The Exchange's proposal to amend Options 1, Section 1(a)(12) to add
the definition of conforming ratio does not impose any burden on
competition because the definition describes conforming ratios which
are the only type of ratios accepted by MRX. Other options markets have
the same definition.\9\
---------------------------------------------------------------------------
\9\ See MIAX Rule 518(a)(8).
---------------------------------------------------------------------------
The Exchange's proposal to amend Options 3, Section 7(v) to
lowercase ``Block Order,'' and amend Options 3, Section 7(w) and (x) to
lowercase ``Facilitation Order'' and ``SOM Order'' and add the term
``paired'' does not impose any burden on intramarket or intermarket
competition because the proposed changes are non-substantive amendments
that are intended to provide consistency between these defined terms
and the use of these terms in Options 3, Section 11(a), (b) and (d).
The Exchange's proposal to amend Options 3, Section 9(a)(2) does
not impose any burden on intramarket competition because the Exchange
will cancel existing auction orders, auction responses and Crossing
Orders for all Members. The Exchange's proposal to amend Options 3,
Section 9(a)(2) does not impose any burden on intermarket competition
because Phlx treats auction orders, auction responses, and Crossing
Orders in a similar manner during a trading halt.\10\
---------------------------------------------------------------------------
\10\ See supra note 4.
---------------------------------------------------------------------------
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \11\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f082859c95dd939f9d9d959e8483b0839593de979f86"><span class="__cf_email__" data-cfemail="354740595018565a5858505b4146754650561b525a43">[email protected]</span></a>. Please include
file number SR-MRX-2025-19 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-MRX-2025-19. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/
[[Page 44743]]
rules/sro.shtml). Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection.
All submissions should refer to file number SR-MRX-2025-19 and
should be submitted on or before October 7, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-17814 Filed 9-15-25; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on September 16, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.